Is the party really over?

Interesting column in The Economist that I don’t necessarily agree with:

More important, few residents of Las Vegas would any longer agree that their city is either great or happy.

Nevada has America’s highest unemployment rate. In Las Vegas, unemployment has risen more this year even as it has flattened in the rest of the country; it peaked at 15.5% in September. Nevada also has America’s highest foreclosure rate. In Las Vegas more than 70% of homeowners with mortgages owe more to the bank than their houses are worth. This desert valley, which once represented the most extreme pleasures in American consumerism, now has the most severe hangover.

via Las Vegas in crisis: Party over | The Economist.

There’s a lot of truth in this article, but the perspective is just slightly wrong. And that makes all the difference.

For instance, the author says that “Tourists are now returning, but in numbers too small” to help Las Vegas. While it’s true that the average spend per visitor has fallen, visitation actually rose in 2010. This would have been a more accurate article a year ago, but even then I’d insist the real story wasn’t that Vegas visitation had fallen, but that it was so resilient. At the (hopefully) tail end of the worst recession in sixty years, 37 million people still came to Las Vegas this year. Surely, that’s got to count for something.

And I take issue with the idea of an “existential” crisis for Las Vegas. Yes, I do believe that it’s possible that the rapid devaluation of people’s net work over the past three years has probably made them more risk averse, or “gun shy,” as I was quoted as saying. But the fact is, they are still coming to Las Vegas, which means that the city doesn’t have a major crisis of existence.

Even my theory, as logical as it sounds, is just a theory, and will never be a fact. As I explained to the reporter, it’s impossible to falsify a claim like that–you would have to have done measures of risk tolerance among people coming to Las Vegas in, say, 2006, then re-done studies on the same people this year. And since it can’t be falsified, it can’t be “true” in the way that 2+2=4 is. So, as I said, it’s the kind of thing that I’ll bring up at cocktail parties if people ask for a pop psychology explanation of what’s going on, but I can’t really say if that’s the reason for falling table hold percentages (a phenomenon which pre-dates the recession, BTW).

For that matter, I asked the reporter for evidence of this big cultural shift: how can he prove that the “zeitgeist” had shifted? It’s a pretty glib concept that, again, can’t be falsified. I could just as reasonably say that, since people saw the economic system melt down and saw companies insulated from their bad choices via government bailouts, people might have a greater tolerance for risk, or at least a lesser appreciation for its consequences.

It’s particularly galling that the author didn’t acknowledge existing revenue trends that might disprove his argument. Slot handle, which I consider as good a measure for the broad “demand” for Nevada gaming as any, rose for the first time in October.

As I told him, the idea that the zeitgeist has shifted against Las Vegas and gambling is both incredibly glib and not borne out by the facts. According to the best archaeological evidence, humans have been gambling for thousands of years; its short-sighted to say that a recession, even one lasting three years or longer, is going to change that.

Silverton goes off-beat in Vegas 7

I missed this yesterday, but my latest Green Felt Journal column is out in Vegas Seven. It’s about some of the unusual events taking place at the Silverton:

Santa is floating inside the 117,000-gallon aquarium at the Silverton Casino and Lodge, his white beard billowing as the parrot fish and stingrays glide by. He’s taking orders for Xbox Lives and bikes via an assistant standing outside with a microphone.

“This is very unusual,” says one Summerlin resident who is here with her three toddlers to see Santa. “But it’s great. I love it.”

Once known for its bargain buffets, a 2004 renovation gave the property a more upscale look and higher-end amenities such as the Twin Creeks steak house. The recession shelved plans for a larger expansion, and in the current economic climate, the casino is finding it as hard to compete as anyone else.So, snorkeling Santa to the rescue.

via Not your father’s casino marketing strategy | Vegas Seven.

The underwater Santa was really quite unusual. With the microphone picking up his scuba breathing, it really sounded like he was about to ask HAL to open the pod bay doors. Very surreal.

Projecting the future

A while back, some folks asked me what I thought the near-future held for Las Vegas gaming and tourism. After mulling over some of the LVCVA data for the past 40 years, I gave them six different scenarios. This might be nice for a wider audience, I thought. But, since I had a lot on my plate, it fell to the bottom of my to-do list.

Today, reading about the PWC report in the Las Vegas Sun, I decided to share what I came up with.

There are so many variables at play, I decided to forecast out six different scenarios that begin with the current trend, but allow for some flexibility.

Instead of looking at statewide numbers, I focused on Clark County, since I was using the LVCVA’s data and they include Clark County gaming revenue with their visitor data.

Through September, Clark County revenue is just about flat with 2009; that’s about where it should end up (a while back I did a post with some statewide revenue projections if you’re curious). The Strip is definitely trending up, but everywhere else continues to drag.

My methodology was simple: by dividing the total county gaming revenue by the number of annual visitors, I got a neat “gaming spend/visitor” number. Yes, this includes the locals’ play with the visitors’ play, but since the locals’ economy is largely driven by tourism (more tourist spending=more tips/paychecks for locals that can end up a locals’ casinos) this wasn’t necessarily a drawback.

Based on the about 2.5% increase in visitation we’ve seen for Las Vegas this year, I decided to offer two main scenarios: a modest and a major increase over the next six years.

The modest increase in visitation assumes a compound annual growth in tourism of 1%. Yes, that’s less than the 2010 total, but I figured this was averaged out for six years, and should conservatively take into account some possible contraction.

The major increase in visitation assumes a compound annual growth in tourism of 7%, which is about equal to what the Strip saw in the 1990s. Not likely, as far as I can see, but it’s a good best-case scenario.

For each possible increase in visitation, I posited three possibilities:

1. Gaming spend/visitor will continue to fall at the 2009-2010 rate (3%)

2. Gaming spend/visitor will remain flat (sounds good, but when adjusting for inflation isn’t)

3. Gaming spend/visitor will increase by an average of 3% year

Below, I’ve got summaries of each of the six scenarios [I’ll post jpgs of the data this afternoon, time permitting]

SCENARIO 1
(Modest increase in visitation, 3% gaming spend/visitor decline)
Visitation +1%, Spend -3%
Clark County gaming revenues decline by about 10% by 2015. More visitors coming doesn’t matter, if they don’t spend more. This kind of sustained decline would have serious impacts for the state’s budget, since 85% of all gaming revenues come from Clark County.

SCENARIO 2
(Modest increase in visitation, gaming spend/visitor flat)
Visitation +1%, Spend Flat%
Now we’re getting somewhere. Gaming revenue increases by $2 billion by 2015, with about $10.8 billion coming in. This is at least a viable future.

SCENARIO 4
(Major increase in visitation, 3% gaming spend/visitor decline)
Visitation +7%, Spend -3%
Even if visitation skyrockets, it’s not worth much if spend/visitor declines: despite handling almost 6 million more visitors in 2015, the total gaming revenue actually fall below their 2010 levels.

SCENARIO 5
(Major increase in visitation, gaming spend/visitor flat)
+7% visitation, flat spend
This looks workable, with an increase of gaming revenue to $10.2 billion by 2015. If there’s a bigger bump in non-gaming spending and higher sales tax collections that offset the increased costs associated with having more visitors, this could be workable.

SCENARIO 6
(Major increase in visitation, 3% gaming spend/visitor increase)
7% increase in visitation, 3% increase in visitor spend
Isn’t this the best of both worlds? More visitors, spending more. We get Clark County gaming revenues rising to $11.9 billion by 2015.

——

Let’s compare my scenarios with PriceWaterhouse Coopers. In 2014, they believe that Nevada’s total gaming revenues will be $12.4 billion. Extrapolating from my Clark County data (assuming that the county will average 85% of total state revenues), here my estimated 2014 statewide totals. These might be a bit optimistic, since I’m guessing that Clark County’s total share of state gaming revenues will increase.

Scenario 1:$9.4 billion
Scenario 4:$10.4 billion
Scenario 2:$10.9 billion
Scenario 5:$11.8 billion
PWC: $12.4 billion
Scenario 3:$12.7 billion
Scenario 6:$13.3 billion

I think the PWC folks might have been right on this one. It’s not the most optimistic projection, but it’s not unduly pessimistic, either. If I had to handicap it, I’d say that in 2014 the statewide gaming revenues should be somewhere between $11.5 billion and $13 billion. There are so many variables out there, though, that it’s pretty hard to handicap.

The complex Vegas story in LVBP

It’s not every day that venting about the frustrating aspects of your job leads you to a column. But if you read my piece in the Las Vegas Business Press, you’ll see how I use some misconceptions about Las Vegas as an opportunity to set the record somewhat straight:

Recently, for example, I received an e-mail for a U.S.-based correspondent for a respected foreign publication who wanted to know whether the rumors were true, and that Las Vegas would soon be closed because of the poor state of the economy.

via Las Vegas Business Press :: David G. Schwartz : Beyond the headlines, real LV story is complex.

For some reason election season put me on a lot of foreign correspondents’ radar, even though I almost never talk politics. I don’t envy those who have to quickly dial into a complex situation and summarize it for a general audience at all.

Still, the idea of Vegas closing down made me think of the end of National Lampoon’s Vacation.

Big concern for Las Vegas

Interesting article in today’s Las Vegas Sun by Richard Velotta about how undue concern over carbon emissions may seriously impact travel. This has tremendous implications for Las Vegas:

Seventy-two government agencies have cut their travel budgets because of environmental concerns, a top travel executive said, leading him to conclude that overzealous environmental policy could be the next roadblock facing the tourism industry.

via Travel expert: Environmental policies loom as tourism threat – Tuesday, Oct. 26, 2010 | 1:55 a.m. – Las Vegas Sun.

This is a real threat to the Las Vegas economy. The city has really suffered from the decline in business travel, and any continued decline would obviously hurt the economy even more. And the implications for leisure travel are even more disturbing.

In many ways, these anti-travel folks are taking the “evils of carbon” disaster porn they’ve been fed and carrying it through to its logical conclusion. If you really believe that carbon emissions are responsible for “destroying the planet,” then only a sadist or a fool would willfully create these emissions for something as trivial as a bachelorette party.

This is one of the reasons why it’s sensible for resorts to take specific action to be more “environmentally responsible”–like reducing waste, recycling, or decreasing energy usage by switching to LED lights. But going away from specifics and talking about nebulous concepts like “sustainability,” I think, raises all sorts of questions, questions whose answers we might not like.

Response to another lame take on Vegas

What is it about Las Vegas that brings out the worst in some writers? The latest victim shares his thoughts on Las Vegas in Smithsonian Magazine, though I cant imagine why an editor would solicit this kind of superficial “analysis,” much less publish it:

I knew, going in, that I’d feel out of place. The glitz, the kitsch, the acid-trip architecture—Vegas isn’t me. I’m more a Vermont guy. I’ve never actually lived in Vermont, but that doesn’t keep me from thinking of myself as a Vermont guy. Writing a book, however, greatly increased my sense of alienation. Vegas doesn’t want you writing any more than it wants you reading. You can sit by the topless pool at the Wynn all day long, all year long, and you won’t see anyone crack open anything more challenging than a cold beer.And it’s not just books. Vegas discourages everything prized by book people, like silence and reason and linear thinking. Vegas is about noise, impulse, chaos. You like books? Go back to Boston.

via Las Vegas: An American Paradox | Travel | Smithsonian Magazine.

It’s probably 1,500 words long, but it feels much longer thanks to the 5 click-throughs you need to do, and the absolutely vapid writing.

Great, J.R., you saw some T&A, and you had a two-minute conversation with some lady in a restaurant. That doesn’t mean you’ve plumbed the soul of America, or even understand Las Vegas at all.

It’s easy to be contemptuous of other people having a good time–the Puritans elevated it to an art form a few centuries ago. But that says more about the writer than the subject, doesn’t it?

On one hand, everyone’s entitled to their opinion. Moehringer spent two years and didn’t have a good time. I get that. But it’s hard not to take what he says personally. I like books, and I live in Vegas. I don’t see any disconnect between the two. And anyone who divides the world between “book people” and the hoi polloi is so ineffably pretentious that…I can’t describe it. But you get the point—really, really pretentious.

That being said, I’ll just mention a few things that I think are really off base in the article. For example, IMHO linear thinking is of definite but limited value. I prefer diagonal thinking–it’s much less limiting.

There are lots of places for silence in Las Vegas. Try Turtlehead Peak, for one: an hour’s hike, and you can look down on the entire valley. It’s beautiful. Or just pick a corner of Sunset Park, or any of the other public parks that dot the valley.

He’s simply wrong that Vegas doesn’t want you writing books. I’ve had no problem writing three books in Las Vegas, and I’m working on the fourth. And as someone who writes a minimum of 5,000 words a month (Vegas Seven, Las Vegas Business Press, Casino Connection, I’m looking at you), I’ve never had a problem finding inspiration or space to write. But I tend not to overthink things, and it’s more a question of, “How many words? When do you want it?” than absorbing writerly inspiration via osmosis or whatever Moehringer does in Fantasy Vermont with all of the book people.

Look, I’m the last person to be a Vegas booster, saying this is the best of all possible cities. It’s just not in my temperament. But I wouldn’t blame any of my shortcomings as a writer on the city. A good craftsman doesn’t blame his tools, or the setting of his workshop. And, like Moehringer, I’m an award-winning author. So there.

Palms ditches scent

I get lots of questions from folks in the media about the use of scent in casinos. Apparently, after a month there wasn’t much question at the Palms, since the casino decided to stop using its air perfume. From the LV Sun:

The Palms scent — teakwood, named after the Southeast Asian tropical hardwood — did leave a lasting impression — but for too many people, apparently, that impression was a bad one.

“The place literally stinks. I’d almost rather smell the smoke,” one tourist noted in his online review.

via Palms turns up its nose at effort to scent casino – Wednesday, July 14, 2010 | 2 a.m. – Las Vegas Sun.

It just goes to show that casino scent-logy isn’t a carefully balanced psychobiological science, it really is a crapshoot. And teakwood, apparently, came up snake eyes. Except that the house didn’t win, so I guess you could say they seven out.

Hard Rock CEO in Vegas Seven

It’s Thursday, so I’ve got a new Green Felt Journal in Vegas Seven. This week, I profile new Hard Rock Hotel president Joseph Magliarditi:

The Hard Rock Hotel got a new president and chief executive officer on June 1. Joseph A. Magliarditi comes with extensive experience in the Las Vegas casino industry and promises to bring a new focus to the property.

Magliarditi started in gaming operations with the Marnell family at the Rio, where he shepherded the property through several expansions and stayed on after Harrah’s Entertainment acquired it in 1999.

via Taking the helm of the Hard Rock Hotel | Vegas Seven.

Interesting talking to Mr. Magliarditi–he definitely knows the market and I’m interested in seeing how his plans to go after the locals slot market work out.

Vegas needs more fun

Las Vegas is far in the rear view mirror as New York tops a list of “fun cities” compiled by portfolio.com:

Portfolio.com/bizjournals created a comprehensive formula to evaluate the opportunities for fun in the nation’s 100 largest markets.

The process began with the collection of federal statistics for 14 relevant types of businesses, from retail stores and restaurants to gambling casinos and golf courses. Each market was graded on both the volume total number and the concentration rate per 100,000 residents of such businesses.

Results were then grouped in seven broad categories of fun: shopping, food and drink, culture, popular entertainment, gambling, and high-impact and low-impact sports. The best scores went to markets that performed well in a wide array of categories. See the methodology sidebar for details.

Second place on the list of America’s fun places belongs to Chicago, which ranks among the 10 leaders in six of the study’s seven categories. Its best performances are third place for food and drink and fourth place for popular entertainment.

Rounding out the top 10 are Boston, Miami, Los Angeles, San Francisco, Seattle, Portland Maine, Philadelphia, and Minneapolis.

via New York Tops As Americas Best City To Have Fun – Business News – Portfolio.com.

You can check the interactive index to see how your favorite city did. Las Vegas scored thusly:

RANK: 26
GAMBLING: 1
SHOPPING: 81 (retail trade establishments)
POPULAR ENTERTAINMENT: 54 (motion picture and video exhibition establishments, spectator sports establishments, amusement parks and arcades)
CULTURE: 29 (performing arts companies, museums, and historical sites)
FOOD AND DRINK: 44 (full-service restaurants and drinking places)
LOW-IMPACT SPORTS: 88 (golf courses and country clubs, marinas, and bowling centers)
HIGH-IMPACT SPORTS: 65 (skiing facilities, fitness centers, and recreational sports centers)
FUN SCORE: 2.04

Las Vegas didn’t do that badly, though we missed out of the top quartile. The methodology seems a bit casual: essentially the editors counted how many of a variety of institutions a city has, from golf courses to museums, and figured the ranking based on that.

I’m most surprised that there are 87 cities with more golf and bowling than us; sure, we don’t have many marinas, but I’d think that the golf alone would put us over 50. I’m even more surprised that the shopping rank is only 81.

I had trouble finding the “methodology sidebar” that explains in detail how they did the survey, but it doesn’t look like there’s any weighting for population. With the New York City metro area having a population of 18,922,571, it’s no shock that they’ve got more shopping, restaurants, and museums than everyone else and top those categories. But how did Portland, Maine get into the top 10? The city has a shopping rank of 3, meaning it has more retail establishments than Los Angeles, with a population of 512,357 vs 12,784,612. And there’s no way that Portland, Maine has more restaurants (rank 27) than Las Vegas.

The more I look at this study, the less it says. But I wonder if the LVCVA is working on a crash course to make us more fun than Rochester, New York (18) or Bridgeport, Connecticut (15).

At least we topped the list in gambling.

Hitting the jackpot in Clark County

In addition to my regular Green Felt Journal column this week, I’ve got a “Latest Thought” for your perusal in Vegas Seven:

There hasn’t been much written about locals casinos on the scholarly front, so Nedelec, a geographer, shared a conclusion from a chapter in 1999’s The Real Las Vegas: Life Beyond the Strip edited by David Littlejohn, Oxford University Press: “Neighborhood casinos have become the senior centers of choice for thousands of local elderly people. … [Gambling] provides them with … a degree of entertainment and excitement that to them seems worth every quarter they lose, infinitely preferable to the county’s senior centers or staying at home watching TV.”

It was a harsh reminder that, yes, this is the crux of the prevailing scholarly literature about locals casinos: warehouses for drone-like elderly Las Vegans who—even if they insist they don’t gamble more than they can afford to lose and actually enjoy themselves—are getting a bad bargain.

That sent me thinking about the reality: There are tons of public recreation opportunities here. Aren’t there? While Real Las Vegas implies that our county rec centers are comparable to the county lockup, I think we have a far broader range of options than any casino I’ve been to—everything from capoeria classes (a Brazilian art that melds martial arts with dancing) at the Cambridge center to watercolor workshops at Desert Breeze. There’s a cost for most of these, but it’s rarely prohibitive, even to those on fixed incomes.

via Our Community Jackpot | Vegas Seven.

That’s pretty much how the idea started–trying to prove that maybe the social scientists aren’t seeing the whole picture, and that we’re not all really a bunch of drones who have nothing to do.